Oil prices drop after surging higher

London: Oil prices retreated Friday, losing a chunk out of the previous session's large gains that had been won thanks to a plunge in US crude stockpiles.

Both main contracts had soared more than two dollars Thursday and Brent briefly went above $50 a barrel after the US Department of Energy said the country's commercial crude inventories slumped by 14.5 million barrels, the sharpest weekly drop in 17 years.

But with analysts not expecting a repeat this week, prices fell on Friday. They said the decline was attributed to the suspension of imports and shutdown of some production owing to Hurricane Hermine, which passed through the Gulf of Mexico in late August.

"The reason behind the enormous drawdown is transitory, and does not influence the demand-supply situation of the oil market," said IG market strategist Bernard Aw.

"One week's worth of data does not make a trend."

Around 1100 GMT, US benchmark West Texas Intermediate for delivery in October was down 66 cents at $46.96 a barrel.

Brent North Sea crude for November delivery slid 70 cents to $49.29 compared with the close on Thursday.

The market has been fixated in recent weeks by an upcoming meeting of OPEC and non-cartel member Russia to discuss ways of tackling a global supply glut that has hampered prices for more than two years.

Overproduction in the markets resulted in crude prices striking a near 13-year low below $30 at the start of 2016.

While officials from Russia and OPEC kingpin Saudi Arabia have sought to soothe concerns ahead of this month's gathering in Algiers, experts are sceptical whether an agreement can be reached.

A previous attempt at a production cap in April was derailed by Iran, which refused to join in talks as it ramps up output after the lifting in January of years of nuclear-linked sanctions.

"Of course both Russia and Saudi Arabia would have liked to have a higher oil price than the current $50," said Bjarne Schieldrop, chief commodities analyst at SEB Markets.

"Over the past week they have talked about stabilising the market. But what do they really mean because the oil market is today in many ways actually fairly balanced.

"Supply is more or less equal to demand and annualised price volatility is right on to what it normally has been historically of about 35 percent."

Schieldrop said the market was in fact moving away from a supply glut situation, with inventories expected to fall next year and beyond.

"What is however highly abnormal and thus imbalanced is the current very low level in upstream oil investments," he noted.

“To save the environment and to fight climate change, my government has planned a major campaign. By 2022, we want to generate 175 GW of renewable energy. In the last three years, we have already achieved 60 GW or around one-third of this target,” he said.